Kazenergy head on environmental law reform

The intention of Environmental Protection Ministry to reform environmental legislation on the tip from major foreign investors was raised at the Third Annual Conference Caspian Offshore Development.

In response to a question concerning the likely reaction of investors to potential reconsideration of existing product share agreements, the former US ambassador to Kazakhstan who is now the acting director of International Energy Agency (IEA) Richard Jones stated:

"It may negatively impact investment attractiveness. It is necessary to understand that it is hard to replay everything after an investor has joined a project. We witnessed such a thing in Latin America, Russia, where change of game rules led to freezing of investment."

Mr Jones' statement found support from General Director of Kazenergy Asset Magauov, who said his organization was in close cooperation with state agencies to reduce investment risks:

"For example, last year we adopted National Plan on Greenhouse Gas Emission Quota Distribution and developed an administrative fines system. But we also need bylaw acts. Therefore we have proposed Environmental Ministry to complete regulations first and get back to penalties then."

To recall, at a recent government sitting, Minister of Environment Nurlan Kapparov laid down a suggestion to shift the year to date excessive greenhouse emission penalties to 2014 and to halve the amounts of punitive sanctions - from 10 MCI to 5 MCI for an emission unit.

On reconsideration of ecology laws, Mr Magauov said:

"There is no conflict of interests and the ministry of environmental protection did not delegate its duties to anyone. It is an initiative that comes from investors suggesting to use global practice. Indeed, we are now facing a situation when a quick reform has brought methodic inaccuracies. For example, last year regulations on operations monitoring in the Kazakh sector of the Caspian Sea were adopted, and that has led to a larger environmental damage. Larger than just from operations. By new rules NCOC has to catch 24 tons of fish as samples instead of previous 600kg. Why do we need such a monitoring?"

It is clear why laws are being made under way for NCOC, it is clear why these bear contradictory character. What about TCO? They have been producing oil over a long time, making billions of dollars and bringing heavy environmental damage.

"Tengizchevroil is not trying to promote a 'custom design' legislation, but presenting its vision. That's why we conducted this conference, to discuss how to make our laws clear and understandable to investors," Mr Magauov replied.